Recent news has come out that JP Morgan Chase and Goldman Sachs, two major Wall Street banking firms, are trading in cryptocurrencies. The next firm on their heels is Jane Street. Jane Street operates in New York, London, and Hong Kong and is heralded as a group of “coders with a Ph.D.” by the New York Times. The acceptance of cryptocurrency by the mainstream trading community could mean big things.
High Tech Traders
Jane Street has been described as a secretive, and high tech, by the New York Times and others. The company trades $8-13 billion worth of bonds, futures, options, and other investment opportunities, in over 1 million trades a day. Business Insider has announced that Jane street has been playing in the Bitcoin pool lately, and will continue to splash in that pond while the coins are profitable.
Jane Street operates a bit differently than its contemporaries, like JP Morgan Chase and Goldman Sachs. Just because those two big oldies announced their involvement with crypto first, doesn’t mean that Jane Street is copying them. Jane Street specializes in arbitrage trading, which can lead to exciting things in the crypto market.
Arbitrage trading is the simultaneous buying and selling of an asset that can take advantage of the differing prices of that asset across various markets. Spreads can be high in the crypto community, with BTC exchanges carrying as much as 10% variance between carriers.
As long as trends like these are emerging in the Bitcoin and other cryptocurrency markets, Jane Street will be there. The firm does wish for consumers to know that they are still focused on making informed and considered investments, and do their research before getting involved in any market.
Programmers and Bankers
Another divergence from more traditional banking, Jane Street uses the Ocaml programming language to assist traders in executing quick and reactive trades. The market changes quickly, and its traders need to be able to keep pace with that. Additionally, the Ocaml protocol they have developed helps to ensure that the arbitrage trades go smoothly, quickly, and intelligently.
Jane Street has even released some of its Ocaml to the open source community. While non-crypto trades are facilitated with this platform, Jane Street was not clear as to whether the crypto trades are handled in the same way. Presumably, there will be some similar platform for trading Bitcoin and the like.
Traditional Bankers Buy-In
With all these big Wall Street trading companies getting involved, cryptocurrencies continue to feel more legitimate, and the public is continually being reminded of their viability. Acceptance into the mainstream trading environment can only mean growth in the community.
Despite bigwigs like Jamie Dimon of JP Morgan Chase calling crypto traders “stupid,” the trend is catching fire. Even at JP Morgan Chase! Lloyd Blankfein of Goldman Sachs says that clients of the banking giant want to see these types of trading options. In an effort to be responsive to their customer base, Goldman Sachs is clearing Bitcoin futures for interested clients.